When the Fed reduces the real interest rate,which of the following does NOT increase?
A) consumption
B) investment
C) government purchases
D) net exports

Question

Quizplus · Accepted Answer

Government purchases are primarily determined by fiscal policy, not by the real interest rate. Reductions in the real interest rate typically stimulate consumption, investment, and net exports by making borrowing cheaper, but they do not directly affect government spending decisions.

When the Fed Reduces the Real Interest Rate,which of the Following